Sale of ethanol by mill owners directly to gas stations could become the 'solution' to contain and curb the rise in gasoline prices

Provisional Measure 1063/21, approved in August by the Government, underwent a public hearing by the Mines and Energy Commission, yesterday (21/09), which had the support of deputies. MP 1063/21 authorizes ethanol plants to sell fuel directly to gas stations, without going through distributors, as it used to be.

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Edited in August, the provisional measure also allows “flagged” service stations (linked to a distributor) to sell products from other suppliers, as long as the consumer is duly informed. Currently, ethanol taxation is done in two stages: part in production, another in distribution.

MP 1063/21 received 73 amendments and awaits analysis by the Chamber of Deputies and the Senate.

Direct sales will reduce the value and maintain the quality of the biofuel, generating benefits for the consumer

For the executive director of the Brazilian Association of Independent and Free Fuel Resellers (Abrilivre), Rodrigo Zingales, the provisional measure will contribute to the reduction of fuel prices in Brazil.

"With greater freedom and competitiveness, the purchase and sale price will tend to go down", he said. Zingales also stated that the three major distributors – Vibra (new name of BR Distribuidora), Ipiranga and Shell – do not approve of the changes, as their power to impose prices will be limited.

In addition, Feplana projects a drop in prices and says there will be no loss in quality. According to Alexande Andrade Lima, president of the Federation of Sugarcane Planters of Brazil (Feplana), the price of biofuel should be lower, especially in plants located in large centers

According to Lima, "The expectation is that the price of ethanol will come down, mainly in the industrial units that are close to the big consumer centers". He also claims that he guarantees the quality of the biofuel that will leave the plant straight to the service stations.

“The sector is well supervised by the ANP. There is no chance of losing quality at the station pumps, as there will be information from the plant that made the product available and this will guarantee quality. The sector is very responsible when it comes to the origin of the product”, he points out.

The president of Feplana participated in the signing ceremony of the MP for the direct sale of ethanol. He says that he did not have access to the content of the measure, but he believes that it is in line with what the productive sector expects.

“There will be no loss of PIS/Confins or federal tax collection. It is important to remember that the producer will not be obliged to carry out direct sales, and the distributors will continue to operate normally. However, I see a better margin for those who sell directly, because when you remove a member from this chain, you end up reducing the cost”, he concludes.

Direct sales from plants will stimulate competitiveness with gasoline

It is still not possible to know exactly how much impact the direct sale of ethanol would generate on the price of biofuel in Brazil, since there is a lot of dependence on industrial logistics in each state. However, a study by Esalq-Log, in 2019, showed that the average cost of transporting ethanol in the state of São Paulo would drop by around 30% with direct sales.

There are also estimates that the concentration of production and distribution margins in the producer and increased competition between mill owners and distributors in the supply of fuel in the market could reduce prices of hydrous ethanol for the final consumer by up to 20 cents per liter.

“The big gain is the appreciation of renewable fuel. It will be more competitive compared to fossil fuel, gasoline, and it will be more appetizing for the consumer to fill up”, points out Sévero.

Brazilian ethanol has attracted the attention of Volkswagen, which aspires to transform Brazil into a center for the development of cars with internal combustion engines.

Brazilian ethanol is a cheaper and more viable alternative compared to electric cars and is gaining prominence internationally and from the multinational Volkswagen for reducing greenhouse gas emissions. Following in the footsteps of the Japanese Toyota, Volkswagen claims that it will adopt ethanol as the best way to electrify the domestic vehicle market and is considering producing vehicles with a flex-fuel hybrid engine.

The interest in our fuel attracted the attention, for example, of Volkswagen, which aspires to transform Brazil into a center for the development of cars with internal combustion engines. The automaker believes that the electric car, in Brazil, would not have the same adhesion and consumption as in Europe. Because, in addition to being expensive, we produce ethanol, considered a biofuel that can very well meet the objective of reducing the emission of pollutants and CO2”, comments Romio.

According to calculations by the Sugarcane Industry Union (Única), considering the complete cycle, which includes sugarcane planting and harvesting, processing, transport and distribution, in addition to use in cars, a vehicle fueled exclusively with Brazilian gasoline ( with 27% anhydrous alcohol) emits 131 g of CO2 per kilometer, compared to just 37 g of CO2/km, if fully fueled with sugarcane ethanol, a value lower than that of a battery model in Europe, which, powered by the matrix region's current energy source, emits 54 g of CO2/km.